Financial Statements of
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Years ended August 31, 2002 and 2001
kpmg
KPMG LLP
Chartered Accountants Telephone (416) 777-8500
Commerce Court West Telefax (416) 777-8818
PO Box 31 Stn Commerce Court www.kpmg.ca
Suite 3300
Toronto ON M5L 1B2
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the balance sheets of Opawica Explorations Inc. (an Exploration Stage Entity) as at
August 31, 2002 and 2001 and the statements of operations and deficit and cash flows for the years
then ended. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial position
of the Company as at August 31, 2002 and 2001 and the results of its operations and its cash flows
for the years then ended in accordance with Canadian generally accepted accounting principles.
Chartered Accountants
Toronto, Canada
November 13, 2002
1
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Balance Sheets
August 31, 2002 and 2001
2002 2001
Assets
Current assets:
Cash and cash equivalents $ 10,416 $ 24,630
Marketable securities and short-term
investments (note 2) 156,000 300,000
Sundry receivables and advances 47,179 70,617
213,595 395,247
Mining interests (note 3) 2,202,042 2,075,830
$ 2,415,637 $ 2,471,077
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 44,989 $ 190,077
Shareholders' equity:
Capital stock (note 4) 12,280,777 11,375,627
Deficit (9,910,129) (9,094,627)
2,370,648 2,281,000
$ 2,415,637 $ 2,471,077
See accompanying notes to financial statements.
On behalf of the Board:
Director
Director
2
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Statements of Operations and Deficit
Years ended August 31, 2002 and 2001
2002 2001
Revenue:
Interest and dividend income $ 5,491 $ 21,380
Administrative expenses:
General administration 171,889 111,631
Engineering and property investigation costs 84,000 96,000
Business promotion 81,082 103,839
Legal fees 35,340 35,306
Shareholder services 50,535 27,444
Depreciation – 12,399
422,846 386,619
Loss before the undernoted items (417,355) (365,239)
Write-off of mining interests (note 3) 675,147 553,842
Loss on disposal of marketable securities – 436
Loss before income taxes (1,092,502) (919,517)
Future income tax recovery (note 5(a)) (277,000) –
Loss for the year (815,502) (919,517)
Deficit, beginning of year (9,094,627) (8,175,110)
Deficit, end of year $ (9,910,129) $ (9,094,627)
Basic and diluted loss per common share (note 4(c)) $ (0.05) $ (0.08)
See accompanying notes to financial statements.
3
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Statements of Cash Flows
Years ended August 31, 2002 and 2001
2002 2001
Cash provided by (used in):
Operating activities:
Loss for the year $ (815,502) $ (919,517)
Items not involving cash:
Write-off of mining interests 675,147 553,842
Loss on disposal of marketable securities – 436
Depreciation – 12,399
Future income tax recovery (277,000) –
Change in non-cash operating working capital (121,650) 33,666
(539,005) (319,174)
Financing activities:
Issue of capital stock 1,182,150 150,000
Investing activities:
Mining interests (801,359) (310,086)
Marketable securities and short-term investments, net 144,000 (246,436)
Proceeds on disposal of mining interest – 524,000
(657,359) (32,522)
Decrease in cash and cash equivalents (14,214) (201,696)
Cash and cash equivalents, beginning of year 24,630 226,326
Cash and cash equivalents, end of year $ 10,416 $ 24,630
Supplemental cash flow information:
Income taxes paid $ – $ 705
See accompanying notes to financial statements.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements
Years ended August 31, 2002 and 2001
4
Opawica Explorations Inc. (the "Company") is in the business of exploring for, and developing, mineral
properties. Substantially all of the efforts of the Company are devoted to these business activities. To
date, the Company has not earned significant revenue and is considered to be in the exploration
stage.
1. Significant accounting policies:
These financial statements have been prepared in accordance with generally accepted
accounting principles. The principal accounting policies followed by the Company are as
follows:
(a) Cash and cash equivalents and marketable securities:
Cash and cash equivalents consist of cash on hand, balances with banks and short-term
money market instruments with remaining maturities of less than 90 days at the date of
purchase carried at the lower of cost and market value, with market value based on quoted
market prices.
Marketable securities and short-term investments consist of investments in marketable
securities with remaining maturities of greater than 90 days at the date of purchase carried
at the lower of cost and market value, with market value based on quoted market prices.
(b) Mining interests:
The Company considers its exploration costs to have the characteristics of property, plant
and equipment. As such, the Company defers all exploration costs, including acquisition
costs, field exploration and field supervisory costs relating to specific properties until those
properties are brought into production, at which time, they will be amortized on a unit-ofproduction
basis based on proven and probable reserves or until the properties are
abandoned, sold or considered to be impaired in value at which time, an appropriate charge
will be made.
The recoverability of the amounts shown for mining interests is dependent upon the
existence of economically recoverable reserves, the ability to obtain financing to complete
the development of such reserves and meet its obligations under various agreements and
the success of future operations or dispositions.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
5
1. Significant accounting policies (continued):
(c) Measurement uncertainty:
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting year. Significant areas requiring the use of management estimates
relate to the determination of impairment of mining interests. Actual results could differ
from those estimates.
The Company is subject to all of the risks normally associated with mining activities.
Changes in estimates and assumptions will occur based on additional information and the
occurrence of future events.
(d) Income taxes:
The Company accounts for income taxes under the asset and liability method. Under this
method of tax allocation, future income and mining tax assets and liabilities are determined
based on differences between the financial statement carrying values and their respective
income tax basis (temporary differences). Future income tax assets and liabilities are
measured using the enacted tax rates expected to be in effect when the temporary
differences are likely to reverse. The effect on future income tax assets and liabilities of a
change in tax rates is included in income in the period in which the change is enacted or
substantively enacted. The amount of future income tax assets recognized is limited to the
amount that is more likely than not to be realized.
(e) Stock-based compensation:
The Company has a stock option plan which is described in note 4. No compensation
expense is recorded under this plan. Upon exercise, all option proceeds are included in
capital stock.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
6
1. Significant accounting policies (continued):
(f) Foreign currency translation:
The assets and liabilities of the Company's foreign operations are considered operationally
dependent on the Company and are translated into Canadian dollars using the temporal
method. Monetary items are translated at the rates in effect on the balance sheet date and
non-monetary items are translated at historical exchange rates. Revenue and expenses
are translated at rates in effect at the time of the transactions. The resulting exchange
gains and losses are recognized in current income from operations.
2. Marketable securities and short-term investments:
The Company's marketable securities and short-term investments are carried at $156,000
(2001 - $300,000), which was equivalent to their market value. The market value, determined
on the basis of closing market quotations, does not necessarily represent the realizable value of
the total holding of any security, which may be more or less than that indicated by market
quotations.
3. Mining interests:
Total costs incurred on mineral properties are summarized as follows:
Mineral Sale of
August 31, Incurred, properties mineral August 31,
2002 2001 fiscal 2002 written off property 2002
Canada
Kidd, Carnegie (a) $ 1,958,675 $ 243,367 $ – $ – $ 2,202,042
Fraserdale (b) 117,155 40,728 (157,883) – –
Duport (d) – 30,616 (30,616) – –
Botswana - Kalahari (c) – 486,648 (486,648) – –
$ 2,075,830 $ 801,359 $ (675,147) $ – $ 2,202,042
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
7
3. Mining interests (continued):
Mineral Sale of
August 31, Incurred, properties mineral August 31,
2001 2000 fiscal 2001 written off property 2001
Canada
Kidd, Carnegie (a) $ 1,734,616 $ 224,059 $ – $ – $ 1,958,675
Fraserdale (b) – 117,155 – – 117,155
Godfrey, Wark (e) 104,522 – (104,522) – –
Mattarow (f) 350,171 – (350,171) – –
Maisonville (g) 58,277 2,299 (60,576) – –
Duport (d) – 5,000 (5,000) – –
Sudbury Basin (h) – 33,573 (33,573) – –
Argentina
Valle del Cura/ Cura
Este (i) 524,000 – – (524,000) –
$ 2,771,586 $ 382,086 $ (553,842) $ (524,000) $ 2,075,830
(a) In February 1999, the Company entered into a 60:40 option and joint venture agreement
("Chance Joint Venture Agreement") with Falconbridge Limited ("Falconbridge"), which
granted the Company an option to acquire a 40% interest in the mineral and mining rights to
three Falconbridge properties located in Kidd Township ("Chance Joint Venture Group").
Under this agreement, the Company earned its 40% interest in two of the properties for
consideration of $900,000 in cash and exploration advances. Due to the Company
expending more than its pro rata share under this agreement and as a result of an
amended agreement in August 2001, the joint venture interest on two of the three properties
under this agreement were adjusted to 58% for Falconbridge and 42% for the Company.
In addition, the Chance Joint Venture Agreement granted the Company the option to earn a
40% interest in the mineral rights below 1,000 metres in one of the three Falconbridge
properties located in Kidd Township. The Company may vest its 40% interest in the third
property by incurring the first $1,000,000 in underground development and/or exploration
prior to February 9, 2004. No amounts have been expended pursuant to this commitment
to August 31, 2002.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
8
3. Mining interests (continued):
In August 2001, the Company acquired options on two further half-lots which adjoin the
Chance Joint Venture Group. The Company has acquired the two half-lots by paying
$5,000 and issuing 50,000 shares to each of the two vendors. These half-lots are subject
to $12,500 option payments to be made every six months, or alternatively, up to a 3% net
smelter royalty of which half of such royalty may be purchased by the Company for
$1,000,000 per half-lot.
During August 2001, the Company entered into an agreement with Falconbridge to include
the above-noted two half-lots into the Chance Joint Venture Agreement. In order for
Falconbridge to earn its 58% interest in the Company's newly acquired half-lots,
Falconbridge must carry out certain surface geophysics, at its own cost, and pay the
Company $10,000 cash and expend $78,300 on drilling on the newly acquired half-lots. As
at November 2001, Falconbridge had earned its interest in the two half-lots.
Effective November 2001, the Company resigned as the operator of the Chance Joint
Venture Agreement and Falconbridge is now the operator. As at December 2001, the joint
venture interests for these properties were adjusted to 59% for Falconbridge and 41% for
the Company.
During fiscal 2002, the Company expended $243,367 on exploration for these properties.
In 1999, the Company also entered into another option and joint venture agreement with
Falconbridge, which grants Falconbridge the option to earn up to a 70% interest in nine
properties, which are 100% owned or under option by the Company, in Kidd and Carnegie
Townships. Under this agreement and amendments thereto, Falconbridge has committed
to $175,000 in expenditures, consisting of $100,000 in property payments to underlying
vendors to be made by July 31, 2000 and $75,000 in exploration to be incurred by
February 9, 2001. All Falconbridge commitments and payments have been made and,
therefore, a joint venture now exists between the Company (30%) and Falconbridge (70%).
The joint venture parties have retained five of the original nine properties in good standing
under this agreement. Nothing has been recorded in the accounts of the Company at
August 31, 2002.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
9
3. Mining interests (continued):
(b) Effective June 1, 2001, the Company acquired an option to earn up to a 100% interest in the
Inco-Fraserdale, Ontario base metal property by incurring $500,000 in exploration,
development, reclamation and operational expenditures.
In July 2001, the Company acquired an option to earn a 100% interest in the Davis-
Fraserdale property which is contiguous to the above Inco-Fraserdale property.
During the year ended August 31, 2002, the Company completed airborne and follow-up
ground geophysics on several areas of the Fraserdale group. This program did not identify
any significant drill targets and, as a result, the Company abandoned its option in July 2002.
The Company has recorded a charge of $157,883 to earnings for all properties under option
in the Fraserdale, Ontario area.
(c) During the year ended August 31, 2002, the Company completed 1,933 metres of drilling on
the Great Red Spot ("GRS") and Tsetseng geophysical targets in South Central Botswana.
The Company's objective was to test these targets for base-precious metal mineralization
and for the causative body of their respective geophysical anomalies. Two large igneous
complexes were discovered which returned no anomalous base or precious metal values
from the drilling. The Company attempted to secure a joint venture partner to deepen and
further the diamond drilling on these targets but was unsuccessful in securing such a
partner. In October 2002, the Company initiated the process to relinquish the GRS and
Tsetseng licences to the Government of Botswana, effective December 31, 2002. In doing
so, the Company will have no further liability in regard to these two licences. As a result of
the Company relinquishing these two licences, a charge of $486,648 has been recorded
against earnings.
(d) During fiscal 2002 and 2001, the Company incurred exploration expenditures for the Duport
property which have been charged to earnings as the Company has abandoned the option.
(e) In fiscal 1999, the Company acquired a 100% interest in 12 properties in Godfrey, Wark,
Kidd and Carnegie Townships in Ontario. Nine of these properties in Kidd and Carnegie
Townships became part of the Falconbridge (70:30) joint venture (note 3(a)). During 2001,
three of these properties located in Godfrey and Wark Townships were abandoned by the
Company. In fiscal 2001, the Company recorded a charge of $104,522 to earnings.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
10
3. Mining interests (continued):
(f) During fiscal 1996, the Company optioned the 38-claim Matarrow Mine property located in
the Matachewan gold-base metal camp of northeastern Ontario. The Company had the
right to explore and exploit this property and had acquired 100% of the property, subject to a
2% net smelter return royalty. During fiscal 2001, the Company determined that no further
work would be performed on this project and has recorded a charge to earnings of
$350,171.
(g) During fiscal 1998, the Company acquired a further three patented claims located in
Maisonville Township for consideration of 30,000 common shares in the Company. The
vendor shall retain a 2.5% net smelter royalty, of which the Company may acquire 1% of the
2.5%, at any time, for $1,000,000. In fiscal 2001, the Company determined that this project
would be abandoned and has recorded a charge to earnings of $60,576.
(h) During fiscal 2001, the Company incurred exploration expenditures in respect of the
Sudbury Basin. The Company has abandoned all exploration and has recorded a charge of
$33,573 to earnings.
(i) During fiscal 1999, the Company entered into a joint venture agreement with Barrick Gold
Corporation ("Barrick"). In October 2000, the Company entered into an agreement with
Barrick to terminate their joint venture and to sell the Company's interests in Cura Este for
U.S. $350,000. Accordingly, in fiscal 2000, the Company wrote down their interests in Cura
Este to Cdn. $524,000 to approximate the proceeds that were received. The Company
retained a 1% net smelter return on production from the properties sold.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
11
4. Capital stock:
(a) Authorized:
Unlimited common shares
Issued and outstanding:
Number of
common shares Amount
Outstanding, August 31, 2000 11,108,533 $ 10,592,425
Issued for mineral property claims 200,000 72,000
Issued pursuant to private placement 1,000,000 150,000
Special warrant conversion 487,000 561,202
Outstanding, August 31, 2001 12,795,533 11,375,627
Issued pursuant to private placement 7,433,334 1,182,150
Tax effect of renouncing 2002 expenditures – (277,000)
Outstanding, August 31, 2002 20,228,867 $ 12,280,777
(b) Pursuant to a Stock Option Incentive Plan (the "Plan"), the Company has set aside
2,500,000 common shares for issue under the Plan. The options are exercisable when
granted and have a term of two years. Changes in the Plan are as follows:
2002 2001
Weighted Weighted
average average
exercise exercise
Options price Options price
Outstanding, beginning
of year 1,000,000 $ 0.40 1,010,000 $ 0.40
Granted 1,010,000 0.31 – –
Expired (1,000,000) 0.40 (10,000) 0.75
Outstanding, end of year 1,010,000 0.31 1,000,000 0.40
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
12
4. Capital stock (continued):
The following summarizes information about stock options outstanding as at August 31,
2002:
Options outstanding
and exercisable
Weighted
Remaining average
Number contractual exercise
Exercise price outstanding life in months price
$0.31 1,010,000 18 $ 0.31
(c) Basic and diluted loss per share:
Basic and diluted loss per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the year.
Diluted loss per share is similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued.
Basic loss per share computation is as follows:
2002 2001
Numerator:
Loss for the year $ 815,502 $ 919,517
Denominator:
Average common shares outstanding 17,883,033 11,769,491
Basic and diluted loss per share $ 0.05 $ 0.08
No stock options or warrants were included in the computation of diluted earnings per share
because exercise prices exceeded the average market price of the Company's common
shares during the year.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
13
4. Capital stock (continued):
(d) In September 2001, the Company issued 200,000 common shares and 1,800,000 flowthrough
shares for gross proceeds of $300,000. The shares and flow-through shares were
purchased by two directors of the Company.
In October 2001, the Company issued 60,000 common shares and 540,000 flow-through
shares at $0.25 per share to a director of the Company for gross proceeds of $150,000. At
the same time, the Company also issued 139,889 common shares, 694,444 flow-through
shares, both at $0.18 per share, and 125,000 share purchase warrants for gross proceeds
of $150,000. The cost of issuing these shares was $17,850. Each share purchase warrant
entitled the holder to purchase one common share at $0.25 per share on or before
October 16, 2002. The warrants expired unexercised.
Pursuant to the terms of the special warrants, the Company renounced Canadian
Exploration Expenditures ("CEE") pursuant to the Income Tax Act (Canada) to holders of
the common shares resulting from the exercise of the special warrants.
In March 2002 the Company issued 4,000,000 common shares and one-half of a share
purchase warrant at $0.15 per share for gross proceeds of $600,000. Each whole warrant
is exercisable for the purchase of one additional common share of Company at any time up
to March 5, 2003 after the closing date at $0.25 per share.
(e) During fiscal 2001, the Company issued 200,000 common shares in respect of mineral
property agreements (note 3(a)).
(f) In July 2001, the Company issued to an arm's-length investor, 900,000 flow-through shares
and 100,000 common shares at a price of $0.15 per share for proceeds of $150,000 to the
Company.
(g) In September 1999, the Company issued 462,000 flow-through special warrants and 25,000
Class A flow-through special warrants (the "special warrants") at a price of $1.25 each for
net proceeds of $561,202. The special warrants are exercisable into one flow-through
common share of the Company and one-half of one warrant, each whole special warrant
entitling the holder to purchase one additional flow-through common share of the Company
at a price of $1.50 per share which expired on August 31, 2000. The 25,000 Class A flowthrough
special warrants were purchased by two of the directors of the Company and are
convertible into one flow-through common share of the Company, for no further warrants
attached thereto.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
14
4. Capital stock (continued):
All special warrants were automatically converted to 487,000 common shares of the
Company on or about the anniversary date of their issue, September 2000. No additional
special warrants were issued or exercised prior to their expiry date of August 31, 2000.
Pursuant to the terms of the special warrants, the Company renounced Canadian
Exploration Expenditures ("CEE") pursuant to the Income Tax Act (Canada) to holders of
the common shares resulting from the exercise of the special warrants.
5. Income taxes:
(a) Provision for income taxes:
The provision for (recovery of) income taxes differs from the amount that would have
resulted by applying Canadian federal and provincial statutory tax rates of 41.62% (2001 -
43.12%).
2002 2001
Income taxes:
Expected income tax recovery calculated
using statutory rates $ (454,699) $ (396,496)
Resource allowance 43,997 40,809
Other – 2,609
Losses not tax benefited 133,702 353,078
Income tax recovery $ (277,000) $ –
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
15
5. Income taxes (continued):
(b) Future tax balances:
The tax effects of temporary differences that give rise to future income tax assets and future
income tax liabilities at August 31, 2002 are as follows:
2002 2001
Future tax assets - long-term portion:
Mining interests $ 617,481 $ 775,010
Capital assets 5,477 5,262
Share issue costs 158,002 140,152
Non-capital losses 1,018,251 1,085,932
Capital losses 96,763 96,521
1,895,974 2,102,877
Valuation allowance (1,895,974) (2,102,877)
Total $ – $ –
(c) Tax loss carryforwards:
The Company has non-capital loss carryforwards for income tax purposes of $2,743,134
(2001 - $2,925,463), which expire as follows:
2003 $ 681,100
2004 370,550
2005 475,384
2006 369,285
2007 267,431
2008 267,741
2009 311,643
$ 2,743,134
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
16
6. Related party transactions:
During the year ended August 31, 2002, $370,302 (2001 - $268,605) was paid to directors, an
officer and companies in which they have an interest for professional and technical services
rendered.
Included in sundry receivables and advances is an amount advanced to a director of $2,914
(2001 - nil).
7. Fair values of financial instruments:
The carrying values of cash and cash equivalents, marketable securities and short-term
investments, sundry receivables and advances and accounts payable and accrued liabilities
approximate their fair values due to the relatively short periods to maturity of these instruments.
8. Commitments:
The Company has the following minimum commitments (other than commitments related to
mining interests) for the next two years:
Rent Fees Total
2003 $ 45,600 $ 105,000 $ 150,600
2004 45,600 – 45,600
$ 91,200 $ 105,000 $ 196,200
The commitments consist of rental payments and contractual obligations for management and
consulting services. The contractual obligations are payable to a director of the Company and
companies in which the director has an interest, as fees and benefits for services rendered.
OPAWICA EXPLORATIONS INC.
(AN EXPLORATION STAGE ENTITY)
Notes to Financial Statements (continued)
Years ended August 31, 2002 and 2001
17
9. Subsequent events:
Subsequent to August 31, 2002, the Company acquired a 100% interest in 88 claims staked by
the Company forming the main land holding of the Straw Lake gold property in northwestern
Ontario. Staking costs were approximately $7,000. These 88 claims are subject to a 1% Net
Smelter Royalty ("NSR") to a private vendor.
In addition, the Company acquired an option to earn a 100% interest in five further claims, from
a private vendor, which form a part of the Straw Lake gold property. These five claims can be
acquired by the Company paying a total of $22,500 in cash and incurring $150,000 in
exploration over the next three years. These five claims are subject to a 2% NSR, of which 1%
NSR may be purchased anytime by the Company for $250,000.
In November 2002, the Company announced a private placement of 2,625,000 shares at $0.10
per share consisting of 2,297,000 flow-through shares and 328,000 non-flow-through shares.
Of the 2,625,000 shares, 866,000 were subscribed to by non-arms length parties.